With the government sending out the clear message that it would not discourage the sale of diesel cars, companies like Maruti and Hyundai are looking to take the fuel to even smaller cars.
Maruti, India's largest carmaker, currently has two diesel small cars in India - Swift and Ritz - with 1.3-litre DDiS engines. The company is now looking to tap a smaller diesel engine that it is currently developing, with Fiat. Parent firm Suzuki Motor Corporation of Japan has a global association with Fiat, from which Maruti has benefited.
"We have been asking Suzuki from time to time that we need diesel engines but the company is traditionally strong in petrol," said RC Bhargava, chairman, Maruti Suzuki India Ltd. "Suzuki and Fiat have a global tie-up and we get the 1.3 litre engine from them. Only Fiat will can say if we will get a smaller engine, but looking at the way things are going, we will for sure need more diesel cars in future."
A smaller diesel engine could benefit the company's Wagon-R, Estilo and A-Star.
Hyundai, which has only one diesel offering - i20 - in the small car space, is likely to launch a diesel avatar of its best selling car i10, once its diesel engine factoryin India becomes operational.
Hyundai, which had announced plans to set up a diesel factory last year, had put it on hold awaiting the government's directive on fuel pricing in the budget. The company is now set to resume its plans.
Others are not lagging. General Motors is set to launch its new small car, Sail, in the second half. The same 1.3-litre engine that powers the two Marutis will be used. GM may also use the 1-litre diesel engine of the Beat in its Spark.
French carmaker Renault would also launch atleast two new diesel cars - its compact SUV Duster and an entry level sedan based on the Nissan Sunny by the end of this year. Honda is set to join the diesel rush with a diesel powertrain for its bestselling sedan City.
Had the industry been able to meet the demand, it is estimated that it would have grown by over 15% instead of the 5% it is expected to log in 2011-12. There is estimated 4 lakh diesel cars on the waiting list.
This growth has come at the cost of petrol car, naturally. Ironically, capacity for petrol is abundand, but their sales have declined by 15%. Diesel car sales have grown by over 35%.